Wanted: An Excuse to Stop Hurting the Economy

From the Washington Post online: a synopsis of the speech given yesterday by U.S. Trade representative Susan Schwab. In that speech, which I heard, Ambassador Schwab made it clear that the U.S. was not going to offer any more cuts to agricultural subsidies as part of the Doha round of trade negotiations under the auspicies of the WTO. According to her, a “bold” offer on subsidies didn’t elicit the desired response (i.e., an offer from the European Union of further cuts to agricultural tariffs) when it was tried last October. So we shouldn’t expect anything from the U.S. soon, and certainly not before the mid-terms.

To her credit, and this was not reported in the Post article, Ambassador Schwab did admit that unilateral liberalization of trade barriers and subsidies is in America’s best interests, but she went on to say that the administration needed “an excuse” for taking that step. Apparently the significant burden on taxpayers and consumers from the current trade policy is not a large enough reason to liberalize trade.

The negotiation-via-press-release approach is not working, and Ambassador Schwab referred to the “quiet conversations” that were going on among trade ministers to try to revive the round. She gave absolutely no clue on how the talks went with EU trade commissioner Peter Mandelson when he visited Washington DC last week, except to say that the talks were “healthy.” Boy, would I like to have been a fly on that wall.

One last comment on Ambassador Schwab’s speech: her belief in a “critical mass” of bipartisan support for free trade is, I think, misguided. I can’t see the Democrats, should they take control of the House(s), giving the Bush adminstration any wins on trade. That leaves us with the original deadline of July 2007 (when the current trade promotion authority expires) for any Doha deal to come to fruition.